BANKS ARE ESSENTIAL TO A GOOD FINANCIAL LIFE BUT NOT ALL OF THEM ARE FAVORABLE IN MONTANA
In this chapter we’ll be looking at the best and worst banks in Montana.
This is a big topic. In fact, I think it’s too big to stick in one chapter. So I’ll break it down into smaller sections, with the first trying to answer “What are the best banks in Montana?”
The second will be an explanation of why things aren’t as great as they seem for sub-categories of ‘banks’ and the third is an explanation of how some of these banks have gotten so good at what they do that they can knock out any other bank from Montana on the basis of just that alone.
So this is going to be one large section, but today we’re going to look at a sub-category: ‘The Best Banks In Montana”
2. What are the best banks in Montana?
In the fall of 2011, the Minnesota Department of Commerce, as part of a comprehensive analysis of the state’s banks and financial services industry, released its annual Credit Quality Report, a compendium of statistics about individual firms. The report is based on data from credit bureau data and the state’s financial information system.
In Montana, this report includes information on the best and worst banks in each county.
Best banks are those that have an A- or higher-than-average credit rating from a nationally recognized credit bureau. Worst banks are those with a D or lower credit rating.
What explains a bank’s success or failure?
A bank does not always have to be recognized as one of the best in its industry — you can find some good ones that are not rated as highly by any credit bureaus. But by analyzing scores at just three big national credit bureaus (Experian, Equifax and TransUnion), we can see which are the most successful in Montana:
List of Best Banks in Montana
|American Bank||1632 West Main Street||Bozeman||MT|
|Ascent Bank||1721 11th Avenue||Helena||MT|
|Bank of Bozeman||875 Harmon Stream Blvd||Bozeman||MT|
|Bank of Montana||125 Bank St Ste 100||Missoula||MT|
|Bank of the Rockies||205 West Main Street||White Sulpher Springs||MT|
|Belt Valley Bank||111 Castner Street||Belt||MT|
|Citizens Bank & Trust Company||130 McLeod Street||Big Timber||MT|
|Eagle Bank||80 Heritage Lane||Polson||MT|
|Farmers State Bank||103 Main Street||Victor||MT|
|First Citizens Bank of Butte||3220 Harrison Avenue||Butte||MT|
|First Interstate Bank||401 North 31st Street||Billings||MT|
|First Montana Bank, Inc.||504 Mineral Avenue||Libby||MT|
|First Security Bank of Deer Lodge||311 Milwaukee Ave||Deer Lodge||MT|
|First Security Bank of Roundup||401 Main St||Roundup||MT|
|First State Bank of Forsyth||880 Main Street||Forsyth||MT|
|Freedom Bank||530 9th St W||Columbia Falls||MT|
|Garfield County Bank||444 Main Street||Jordan||MT|
|Glacier Bank||49 Commons Loop||Kalispell||MT|
|Granite Mountain Bank, Inc.||139 E Broadway||Philipsburg||MT|
|Independence Bank||435 3rd Street||Havre||MT|
|Little Horn State Bank||835 N Center Ave||Hardin||MT|
|Madison Valley Bank||213 E Main Street||Ennis||MT|
|Manhattan Bank||124 S Broadway||Manhattan||MT|
|Opportunity Bank of Montana||1400 Prospect Ave||Helena||MT|
|Peoples Bank of Deer Lodge||430 Main Street||Deer Lodge||MT|
|Rocky Mountain Bank||2615 King Ave W||Billings||MT|
|Stockman Bank of Montana||700 Main Street||Miles City||MT|
|Stockmens Bank||117 Central Avenue||Cascade||MT|
|The Bank of Baker||116 South Main||Baker||MT|
|The First State Bank of Malta||1 South 1st Street East||Malta||MT|
|The First State Bank of Shelby||320 Main Street||Shelby||MT|
|Three Rivers Bank of Montana||233 E Idaho||Kalispell||MT|
|TrailWest Bank||11300 US Highway 93 S Ste D||Lolo||MT|
|Valley Bank of Kalispell||41 3rd Street West||Kalispell||MT|
|Valley Bank of Ronan||63659 US Highway 93||Ronan||MT|
|Yellowstone Bank||12 1st Avenue||Laurel||MT|
3. MONTANA STATE-CHARTERED BANKS & TRUST COMPANIES in detail
The term “Montana-state-chartered banks” refers to state-chartered banks that are members of the Federal Deposit Insurance Corporation (FDIC) and have federally insured deposits. Montana’s three State-chartered banks include:
(1) The Federal Deposit Insurance Corporation.
This is the largest organization of this sort in the nation, with $232 billion in assets and $27 billion in deposits. It is the only FDIC member with assets used for direct deposit; this means that any bank or other financial institution (except the FDIC itself) can use its assets for depositing funds into a customer’s account. Currently, there are no non-Federally insured banks operating under this designation.
(2) Montana Bank & Trust Company
(3) The Small Business Administration (SBA)
This State has also been designated as a Small Business Development Center providing grants for small businesses. It is also a source for corporate development grants, loans, and training programs for small businesses. SBA loans are generally available to new business owners who purchase new small business equipment and software, but some loans may be available to existing small businesses where economic conditions warrant the loan to be made before having purchased inventory or equipment.
In addition to these agencies, Montana also has three private banks – First National Bank of Missoula, Montana State Bank of Bozeman and Montana National Bank at Great Falls – all of which are not federally insured by the FDIC or SBA. These banks were not established through the legislative process of incorporation, but through mutual agreement among their stockholders which they entered into when they were formed, rather than being established through legislation between state legislatures and their respective representatives in Congress.
The State National Bank of Billings
There are currently six federal credit unions located in Montana:
- United Federal Credit Union
- Western Federal Credit Union
- Delta Federal Credit Union
- First Federal Credit Union
- First American Credit Union
- Northwest Community Federal
Credit Union Of Great Falls is one such credit union – it has $100 million in assets – but it was chartered by Congress rather than Montana’s legislature. And while there isn’t an official list published by either organization (the FDIC or SBA), it would likely be considered as part of “the most profitable BANKS OF MONTANA & THE LOWEST CREDIT RATINGS OF THE UNITED STATES”.
4. The best banks in Montana
The best banks in Montana are those that have a primary focus on the state’s economy. Throughout the last 40 years, we heard from each and every Montana banker that there was a bank in Montana that was their “banker of choice”. But today, as the number of state-chartered banks has declined to just eight, it is clear that the top five don’t have any things Montana bankers value.
And while they are all excellent institutions, they are not necessarily the best ones for our readers.
Let’s take a look at each and see what they do well and what they don’t do so well:
1) There are three very good banks in Utah–75th Street Capital Bank, First Federal Savings Bank & Trust Co., & 70th Street Capital Bank & Trust Co.
2) There is also one very good bank in Wyoming–The National Bank of Wyoming
3) The National Bank of Arkansas only ranks with one other bank–The National Bank of Arkansas
4) There is one (1) bank ranked #1–Southwest National Bank & Trust Co.
5) There is one (1) bank ranked #2–Branch Financial Corporation
Montana is a state that has a lot of high quality and diverse banking options. Unfortunately, the worst banks in Montana have really good credit ratings. This is generally not true for other states and can be a good indicator of bank risk.
A good friend of mine recently started an online bank in Montana without having any experience or knowledge about banking or financial services. But he’s not alone. The Financial Industry Regulatory Authority (FINRA) found that in 2016, there were 33 banks with below-average credit ratings in Montana and 21 with above-average credit ratings.
This isn’t just a problem for Montana banks — it’s happening all over the country as well!
There are two main factors that affect a bank’s credit risk:
• The size of its deposit base relative to its assets
• The age of its deposits relative to its assets
As you can see from the table above, deposits are much more important for banks than assets are in Montana, yet some of the weakest credit ratings (in terms of deposit volume) are also among the best overall, with Five Star Bank having one of the best overall rankings in both categories. STG Bank.
First State Bank and Guaranty Bank fall into this category as well as several others from smaller companies with strong reputations. Only one — Beacon Bank — has an asset size below $20 million; but one only needs to look at their loan portfolio to realize how much they have on hand relative to their balance sheet to ensure they won’t go under anytime soon!
I think this is pretty telling because it shows that it is possible for small companies (with weak economies or bad reputation) to be successful in banking despite having weak assets; and even though they don’t have huge deposits like large corporations do, they still have enough assets on hand (for example, First State Bank has over $90 million on hand compared to Beacon’s $29 million).
And if you look at their credit ratings, you can see that their rating is actually much higher than what most other small companies get! Not only does this make sense intellectually, but also makes sense historically: Smaller banks were often too small (in terms of resources) for larger ones to take over them because they could not afford to purchase more capital from the larger ones and/or didn’t want them taking over them because then they might take control away from them.